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2020 foresight: what's on the agenda?

12/19/2019 12:00:00 AM

After the upheaval of the general election, it's a good time to take stock of what needs to be on employers' radar for 2020. 

Key changes coming into force on 6 April 2020 include

Contracts of employment

Employers are currently required to provide a written statement of terms of employment, containing certain key information, to all new employees within 2 months of their start date.   From April, employers will need to provide a written statement of terms to all workers and employees on their first day of engagement/employment. The statement of terms will also need to contain extra information about variable working hours, probation periods, training, family-friendly rights and benefits.   The purpose of the changes is to increase transparency for staff.  These requirements will apply to all new joiners and any existing staff who request such a statement. Employers will therefore need to update their contracts to ensure these statutory requirements are met.  The Government has promised to publish written guidance on this, but as yet it has not appeared. 

Holiday pay

Where workers have variable pay or no normal working hours, holiday pay will now need to be calculated by averaging pay over the previous 52 weeks, rather than 12 weeks as at present.   The intention is to take into account seasonal fluctuations in pay.  Employers will need to ensure that their payroll teams/providers are aware of these changes. 

Termination payments

Currently, the first £30,000 of a compensation payment for loss of employment (usually paid under a settlement agreement) can be paid free of tax and national insurance contributions, with the balance over £30,000 subject to income tax only.  From 6 April, the balance will be subject to employers' National Insurance contributions (at 13.8%) as well as income tax.  This will increase the cost to employers of making termination payments (as employers are generally not permitted to pass this cost onto the employee by way of indemnity, with limited exceptions related to share schemes).  In practice, employers will take this cost into account when calculating what to offer an employee by way of settlement. 

Agency workers

The so-called Swedish Derogation (which exempts employers from the equal pay duty under the Agency Worker Regulations if the workers are paid between assignments by their agency) will be repealed. 

Parental bereavement leave

Parents and primary carers who suffer the loss of a child under the age of 18 will be entitled to parental bereavement leave.  It will also apply to parents who suffer a stillbirth after 24 weeks of pregnancy (in which case the mother will also be entitled to up to 52 weeks of maternity leave and/or pay).  The leave will be paid (expected to be at statutory maternity pay rate) for employees with 26 weeks' service or more at the date of bereavement, and unpaid for other employees.  

IR35

Changes to IR35 in the private sector are due to come into force in April (see our previous update here).  During the general election campaign, the Chancellor indicated that the Government intended to review this, but the Queen's Speech on 19 December gave no indication that the changes would be postponed. 

Other reforms in the pipeline

The Queen's Speech included a range of employment law changes, including:

  • Creating a new, single enforcement body for employment law;
  • Ensuring that tips left for workers go to them in full;
  • A right for workers with variable hours to request a more predictable contract;
  • Extending redundancy protection for pregnant women and those on/returning from maternity leave;
  • A right for parents to take extended leave for neonatal care;
  • A right to one week's leave for unpaid carers;
  • A consultation on making flexible working the default unless employers have good reason not to;
  • Extending the National Living Wage, which currently applies to people over the ages of 25, to those aged 21 and over within five years
  • Raising the National Insurance threshold to £9,500 next year. 

Brexit

In other news, the UK is due to leave the EU on 31 January 2020.  Assuming the Withdrawal Agreement is ratified by Parliament (which appears likely now that the Government has a majority), the transition period will last until December 2020, after which new trading arrangements will come into force (if they have been agreed), the UK will leave without a deal or there will be an extension of the transition period.   The Prime Minister has indicated his opposition to seeking a further extension.   As ever with Brexit, watch this space for further updates. 

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